Promoting Enduring Value for our Stakeholders
N. S. Vishwanathan
Independent Director and J
Part-Time Chairman M
Dear Shareholders,
It gives me immense pleasure to present to you the Bank's
first-ever Integrated Annual Report for the financial year 2023-24. As I write my
inaugural letter to the shareholders,I feel delighted and privileged to have joined the
esteemed Board of Axis Bank in a year that marked its 30th year of unwavering
service and commitment to the stakeholders.
The year gone by turned out to be better than expected for the global
economy. In 2023, the global economy remained resilient, with the US being the primary
driver of positive growth, supported by fiscal expansion. Even though various high
frequency indicators continue to signal a stable growth outlook, the persistence of core
inflation across major economies does limit the space for monetary easing in 2024.
Geopolitical uncertainties, which intensified further during the year, too, continue to
pose risks related to transportation costs and energy prices.
The Indian economy, on the other hand, continues to remain a bright
spot. Domestic economic activity has been expanding at a healthy pace, led by sustained
buoyancy in manufacturing and services. The real-estate cycle has turned after a nearly
decade-long downturn, corporate balance sheets are sound, and capacity utilisation in
sectors like power generation, cement and steel is triggering new investments. Inflation,
in India, is headed in the right direction, fiscal consolidation is progressing well,
external balance sheet is in a stronger position and the financial sector remains
resilient.
We, at Axis Bank, remain well positioned to capture the large growth
opportunities driven by steady consumption and revival in investment cycle. During the
year, we continued to adhere firmly to our strategic GPS framework towards becoming a
resilient all-weather franchise. Our identified focus segments, namely SME, Small Business
Banking, Mid Corporate, Rural, Personal Loans and Credit Cards are well aligned with
domestic macro themes; and these together grew 26% y-o-y. The Bank delivered a
consolidated return on equity (ROE) of 19.29% with better quality and consistency in
earnings.
The Bank remains well capitalised with organic net accretion of 44 bps
of CET -1 capital in fiscal 2024. The strength of our balance sheet is reflected through
cumulative non-NPA provisions of ^12,134 crores, and standard asset coverage ratio of
1.26%.
At Axis Bank, we embrace a philosophy that prioritises enduring growth
and the well-being of our customers and stakeholders. In the last few years, the Bank has
invested significantly in strengthening its governance and culture across risk, audit, and
compliance.
With the ever-evolving regulatory environment and increasing demands
from our customers, fostering a culture of Risk and Compliance is of utmost importance.
The Board and senior management of the Bank remains vigilant of emerging risks and is
fully committed to ensuring compliance with applicable laws and regulations.
I am pleased to have inherited the Board, which has a rich and diverse
expertise across the functional areas spanning from core banking and finance, risk
management, information technology (IT), payments, business management, human resources,
and capital markets to regulation and supervision of the banking and securities markets.
Our Board not only includes individuals who have shaped the contours of the IT, banking,
and insurance sectors but also includes those who have been core members of the Central
Bank and the SEBI, steering the nation's financial course with over three decades of
experience in recommending and implementing policies, systems, guidelines, and
regulations. The Board has also been instrumental in shaping policies, strategies, and the
long-term vision for the Bank with its practical experience across our focus areas like
rural, commercial banking, customer service and digital.
Committed to upholding the highest standards of corporate governance,
the Board continues to foster transparency, accountability, and ethical practices,
enabling us to thrive in the dynamic banking industry. I am delighted to state that our
notable emphasis on corporate governance and regulatory compliance in the last few years
has further solidified our standing in the industry across key benchmark ranking indices.
The Bank has been recognised in the highest ‘Leadership' category
with a score of 77 in the Indian Corporate Governance Scorecard, published in January 2024
by Institutional Investor Advisory Services (‘IiAS') with an evaluation framework
built around globally accepted G20 and OECD principles.
We have modernised our technology architecture and operations platform
enabled by automation and predictive analytics towards building a resilient, scalable, and
future ready organisation. The Bank continues to invest in new technologies, including
Generative Artificial Intelligence (Gen AI), which are instrumental in propelling us
towards a future where innovation and customer satisfaction converge. We have set up a
Financial Crime Intelligence division this year that will leverage our strength in data
analytics, digital monitoring, and fraud control to further strengthen our defences.
As a leading financial institution, we remain committed to playing a
pivotal role in enabling a low-carbon, more inclusive and more equitable economy. In 2021,
we were the first Indian bank to establish a standalone ESG Committee of the Board. This
committee has strengthened the Bank's strategic thinking and decision-making around ESG.
The ESG commitments that we took in September 2021 are aligned to the
United Nations Sustainable Development Goals (UN SDGs) and India's commitments under the
Paris Agreement. We have already met our target of incremental financing of ^30,000 crores
under Wholesale Banking to sectors with positive social and environmental outcomes, much
ahead of the set timeline. We continue to remain on our glide path to scale down exposure
to carbon-intensive sectors, including coal and thermal power, with our actual fiscal 2024
exposure closing below the target.
We have also planted 1.33 million saplings so far, in line with our
target of planting 2 million trees across India by fiscal 2027 as part of our contribution
to creating a carbon sink.
As responsible corporate citizen, we continue to make a positive
difference to the society. During the year, over 3.85 lakh small, marginal farmers and
landless communities across rural India were positively impacted through our Sustainable
Livelihood Programme. During the year, we continued our participation in and contribution
to policy advocacy and thought leadership on topics around ESG, climate action and CSR
with formal representations on diverse policy level, industry, and academic forum, such as
the World Economic Forum, SEBI, CII and FICCI. I am pleased to report that the Bank
received a rating of ‘A' in the MSCI ESG Ratings assessment during the year.
As I look ahead, we, as a Bank, remain well placed to advance our
agenda of sustainable growth and profitability to serve our stakeholders ‘Dil Se' and
make their dreams a reality. We remain committed to achieving and adhering to the highest
standards of corporate governance, and we continue to implement robust policies and
actions across the Bank to drive positive change. I am confident that the collective
efforts of our employees, senior management and the Board will reinforce Axis Bank's
prominence as a market leader, delivering value to all stakeholders.
Warm regards,
N. S. Vishwanathan
Independent Director and Part-Time Chairman